Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 02, 2016 | Aug. 03, 2016 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jul. 2, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | ZBRA | |
Entity Registrant Name | ZEBRA TECHNOLOGIES CORP | |
Entity Central Index Key | 877,212 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 52,766,891 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Jul. 02, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 141 | $ 192 |
Accounts receivable, net of allowances for doubtful accounts of $6 | 631 | 674 |
Inventories, net | 362 | 394 |
Prepaid expenses and other current assets | 88 | 72 |
Total Current assets | 1,222 | 1,332 |
Property and equipment, net | 301 | 298 |
Goodwill | 2,496 | 2,493 |
Other intangibles, net | 640 | 757 |
Long-term deferred income taxes | 54 | 52 |
Other long-term assets | 78 | 92 |
Total Assets | 4,791 | 5,024 |
Current liabilities: | ||
Accounts payable | 347 | 289 |
Accrued liabilities | 303 | 358 |
Deferred revenue | 209 | 198 |
Income taxes payable | 0 | 31 |
Total Current liabilities | 859 | 876 |
Long-term debt | 2,873 | 3,012 |
Long-term deferred revenue | 118 | 124 |
Other long-term liabilities | 110 | 99 |
Total Liabilities | 3,960 | 4,111 |
Stockholders’ Equity: | ||
Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued | 0 | 0 |
Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares | 1 | 1 |
Additional paid-in capital | 189 | 194 |
Treasury stock at cost, 19,375,649 and 19,990,006 shares at July 2, 2016 and December 31, 2015, respectively | (615) | (631) |
Retained earnings | 1,320 | 1,398 |
Accumulated other comprehensive loss | (64) | (49) |
Total Stockholders’ Equity | 831 | 913 |
Total Liabilities and Stockholders’ Equity | $ 4,791 | $ 5,024 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Jul. 02, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 6 | $ 6 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Treasury Stock, Shares | 19,375,649 | 19,990,006 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 |
Common Stock, Shares, Issued | 72,151,857 | 72,151,857 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Net sales: | ||||
Net sales of tangible products | $ 753 | $ 762 | $ 1,467 | $ 1,517 |
Revenue from services and software | 126 | 128 | 259 | 266 |
Total Net sales | 879 | 890 | 1,726 | 1,783 |
Cost of sales: | ||||
Cost of sales of tangible products | 387 | 407 | 760 | 793 |
Cost of services and software | 86 | 90 | 170 | 188 |
Total Cost of sales | 473 | 497 | 930 | 981 |
Gross profit | 406 | 393 | 796 | 802 |
Operating expenses: | ||||
Selling and marketing | 112 | 125 | 233 | 247 |
Research and development | 95 | 100 | 188 | 196 |
General and administrative | 78 | 70 | 152 | 136 |
Amortization of intangible assets | 60 | 63 | 119 | 131 |
Acquisition and integration costs | 34 | 31 | 71 | 57 |
Exit and restructuring costs | 5 | 18 | 11 | 29 |
Total Operating expenses | 384 | 407 | 774 | 796 |
Operating income (loss) | 22 | (14) | 22 | 6 |
Other (expenses) income: | ||||
Foreign exchange (loss) gain | (5) | 11 | (4) | (16) |
Interest expense and other, net | (51) | (50) | (101) | (101) |
Total Other expenses | (56) | (39) | (105) | (117) |
Loss before income taxes | (34) | (53) | (83) | (111) |
Income tax expense (benefit) | 15 | 24 | (5) | (9) |
Net loss | $ (49) | $ (77) | $ (78) | $ (102) |
Basic loss per share (in USD per share) | $ (0.95) | $ (1.50) | $ (1.51) | $ (2) |
Diluted loss per share (in USD per share) | $ (0.95) | $ (1.50) | $ (1.51) | $ (2) |
Basic weighted average shares outstanding (in shares) | 51,533,236 | 50,917,161 | 51,405,373 | 50,798,238 |
Diluted weighted average and equivalent shares outstanding (in shares) | 51,533,236 | 50,917,161 | 51,405,373 | 50,798,238 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (49) | $ (77) | $ (78) | $ (102) |
Other comprehensive income (loss), net of tax: | ||||
Unrealized gain (loss) on anticipated sales hedging transactions | 11 | (5) | (4) | (3) |
Unrealized (loss) gain on forward interest rate swaps hedging transactions | (3) | 3 | (10) | (4) |
Foreign currency translation adjustment | (6) | (8) | (1) | (10) |
Comprehensive loss | $ (47) | $ (87) | $ (93) | $ (119) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2016 | Jul. 04, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (78) | $ (102) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 154 | 162 |
Amortization of debt issuance cost and discount | 11 | 10 |
Share-based compensation | 12 | 18 |
Excess tax benefit from equity-based compensation | (2) | (11) |
Deferred income taxes | 3 | (25) |
Unrealized gain on forward interest rate swaps | (2) | 0 |
All other, net | 4 | 1 |
Changes in assets and liabilities, net of businesses acquired: | ||
Accounts receivable | 46 | 48 |
Inventories | 32 | (23) |
Other assets | 20 | (17) |
Accounts payable | 51 | (43) |
Accrued liabilities | (66) | 1 |
Deferred revenue | 4 | 16 |
Income taxes | (61) | (18) |
Other operating activities | (6) | 3 |
Net cash provided by operating activities | 122 | 20 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (35) | (49) |
Acquisition of businesses, net of cash acquired | 0 | (49) |
Proceeds from sale of long-term investments | 0 | 2 |
Purchases of long-term investments | (1) | 0 |
Purchases of investments and marketable securities | 0 | (1) |
Proceeds from sales of investments and marketable securities | 0 | 25 |
Net cash used in investing activities | (36) | (72) |
Cash flows from financing activities: | ||
Payment of long-term debt | (213) | (130) |
Proceeds from issuance of long-term debt | 68 | 0 |
Proceeds from exercise of stock options and stock purchase plan purchases | 5 | 11 |
Taxes paid related to net share settlement of equity awards | (6) | (13) |
Excess tax benefit from share-based compensation | 2 | 11 |
Net cash used in financing activities | (144) | (121) |
Effect of exchange rate changes on cash | 7 | (16) |
Net decrease in cash and cash equivalents | (51) | (189) |
Cash and cash equivalents at beginning of period | 192 | 394 |
Cash and cash equivalents at end of period | 141 | 205 |
Supplemental disclosures of cash flow information: | ||
Income taxes paid, net | 52 | 21 |
Interest paid | $ 99 | $ 91 |
Description of Business and Bas
Description of Business and Basis of Presentation | 6 Months Ended |
Jul. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Zebra Technologies Corporation and its subsidiaries ("Zebra" or "Company") is a global leader respected for innovative solutions in the automatic information and data capture industry. We design, manufacture, and sell a broad range of products that capture and move data, including: mobile computers; barcode scanners and imagers; radio frequency identification device ("RFID") readers; wireless LAN (“WLAN”) solutions and software; specialty printers for barcode labeling and personal identification; real-time location systems (“RTLS”); related accessories and supplies such as self-adhesive labels and other consumables; and software and services that are associated with these products. End-users of our products include those in the retail, transportation and logistics, manufacturing, healthcare, hospitality, warehouse and distribution, energy and utilities, and education industries around the world. Our customers have traditionally benefited from proven solutions that increase productivity and improve efficiency and asset utilization. The Company is poised to drive and capitalize on the evolution of the data capture industry into the broader Enterprise Asset Intelligence ("EAI") industry, based on important technology trends like the Internet of Things ("IoT"), ubiquitous mobility and cloud computing. EAI solutions offer additional benefits to our customers including real-time, data-driven insights that improve operational visibility and drive workflow optimization. Management prepared these unaudited interim consolidated financial statements according to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information and notes. These consolidated financial statements do not include all of the information and notes required by United States generally accepted accounting principles (“GAAP”) for complete financial statements, although management believes that the disclosures are adequate to make the information presented not misleading. Therefore, these consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2015. In the opinion of the Company, these interim financial statements include all adjustments (of a normal, recurring nature) necessary to present fairly its consolidated balance sheet as of July 2, 2016 and the consolidated statements of operations and comprehensive loss for the three and six months ended July 2, 2016 and July 4, 2015 and the consolidated statements of cash flows for the six months ended July 2, 2016 and July 4, 2015. These results, however, are not necessarily indicative of the results expected for the full year. During the first half of 2016, the Company identified certain errors in its 2015 annual consolidated financial statements primarily related to the underaccrual of certain estimates, most notably for its sales commission plan, which were partially offset by tax-related items. These errors were corrected in the first half of 2016 by recording $11.0 million of additional expenses, primarily within operating expenses, which when combined with tax-related items resulted in a $6.6 million increase to the net loss within the consolidated statement of operations. The Company concluded that these errors were not material to the consolidated financial statements for the year ended December 31, 2015 and is not expected to be material to the consolidated financial statements for the year ending December 31, 2016. Reclassifications: Prior-period amounts differ from amounts previously reported because certain immaterial amounts in the prior year’s financial statements have been reclassified to conform to the current year’s presentation. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jul. 02, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Issued Accounting Pronouncements | Significant Accounting Policies Income Taxes The Company’s interim period tax provision is determined as follows: • At the end of each fiscal quarter, the Company estimates the income tax provision that will be provided for the fiscal year. • The forecasted annual effective tax rate is applied to the year-to-date ordinary income (loss) at the end of each quarter to compute the year-to-date tax applicable to ordinary income (loss). The term ordinary income (loss) refers to income (loss) from continuing operations, before income taxes, excluding significant, unusual or infrequently occurring items. • The tax effects of significant, unusual or infrequently occurring items are recognized as discrete items in the interim periods in which the events occur. The impact of changes in tax laws or rates on deferred tax amounts, the effects of changes in judgment about valuation allowances established in prior years, and changes in tax reserves resulting from the finalization of tax audits or reviews are examples of significant, unusual or infrequently occurring items. The determination of the forecasted annual effective tax rate is based upon a number of significant estimates and judgments, including the forecasted annual income (loss) before income taxes of the Company in each tax jurisdiction in which it operates, the development of tax planning strategies during the year, and the need for a valuation allowance. In addition, the Company’s tax expense can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions. Recently Adopted Accounting Pronouncement In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-5, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” This update provides guidance to customers about whether a cloud computing arrangement includes a software license or should be accounted for differently. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance does not change generally accepted accounting principles for a customer’s accounting for service contracts. This update is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. The Company has prospectively adopted this new standard on January 1, 2016 and concluded that it does not have a material impact on its consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued ASU 2014-09, “ Revenue from Contracts with Customers (Topic 606) .” The core principle is that a company should recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In March 2016, the FASB issued ASU 2016-08, “ Principal versus Agent Considerations (Reporting revenue gross versus net) ,” which clarifies gross versus net revenue reporting when another party is involved in the transaction. In April 2016, the FASB issued ASU 2016-10, “ Identifying Performance Obligations and Licensing ,” which amends the revenue guidance on identifying performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB issued ASU 2016-11, “ Rescission of SEC Guidance Because of ASU 2014-09 Pursuant to Staff Announcement at March 3, 2016 EITF Meeting, ” which rescinds certain SEC Staff Observer comments upon adoption of Topic 606. In May 2016, the FASB also issued ASU 2016-12, “ Narrow-Scope Improvements and Practical Expedients, ” which provides certain improvements and practical expedients in the interpretation and application of this topic. There are two transition methods available under the new standard, either cumulative effect or retrospective. These standards will be effective for the Company in the first quarter of 2018. Earlier adoption is permitted only for annual periods after December 15, 2016. Management is still assessing the impact of adoption on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory, ” which changes the measurement principle for inventory from the lower of cost or market to the lower of cost or net realizable value for entities that measure inventory using first-in, first-out (FIFO) or average cost. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for the Company in the first quarter of 2017. Earlier adoption is permitted and the guidance must be applied prospectively after the date of adoption. Management is still assessing the impact of adoption on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, ” which provides for simplification of certain aspects of employee share-based payment accounting including income taxes, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard will be effective for the Company in the first quarter of 2017 and will be applied either prospectively, retrospectively or using a modified retrospective transition approach depending on the area covered in this update. Earlier adoption is permitted. Management is still assessing the impact of adoption on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ” ASU 2016-01 amends various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. With respect to the Company's consolidated financial statements, the most significant impact relates to the accounting for equity investments. This standard will be effective for the Company in the first quarter of 2018. Early adoption is prohibited for those provisions that apply to the Company. Amendments should be applied by means of cumulative effect adjustment to the consolidated balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values including disclosure requirements should be applied prospectively to equity investments that exist as of the date of adoption of the ASU. Management is still assessing the impact of adoption on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “ Leases (Subtopic 842). ” This ASU increases the transparency and comparability of organizations by recognizing lease assets and liabilities on the consolidated balance sheet and disclosing key quantitative and qualitative information about leasing arrangements. The principal difference from previous guidance is that the lease assets and lease liabilities arising from operating leases were not previously recognized in the consolidated balance sheet. The recognition, measurement, presentation and cash flows arising from a lease by a lessee have not significantly changed. This standard will be effective for the Company in the first quarter of 2019, with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, which includes a number of optional practical expedients that entities may elect to apply. Management is currently assessing the impact of adoption on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments-Credit Losses (Topic 326) No. 2016-13-Measurement of Credit Losses on Financial Instruments. ” The new standard requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. There are two transition methods available under the new standard dependent upon the type of financial instrument, either cumulative effect or prospective. The standard will be effective for the Company in the first quarter of 2020. Earlier adoption is permitted only for annual periods after December 15, 2018. Management is currently assessing the impact of adoption on its consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jul. 02, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Financial assets and liabilities are to be measured using inputs from 3 levels of the fair value hierarchy in accordance with ASC Topic 820, “ Fair Value Measurements .” Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into the following 3 broad levels: Level 1: Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. In addition, the Company considers counterparty credit risk in the assessment of fair value. Financial assets and liabilities carried at fair value as of July 2, 2016, are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Derivative contracts-foreign currency (1) $ 2 $ — $ — $ 2 Investments related to the deferred compensation plan 10 — — 10 Total Assets at fair value $ 12 $ — $ — $ 12 Liabilities: Forward interest rate swap contracts (2) $ — $ 40 $ — $ 40 Derivative contracts-foreign currency (1) — 4 — 4 Liabilities related to the deferred compensation plan 10 — — 10 Total Liabilities at fair value $ 10 $ 44 $ — $ 54 Financial assets and liabilities carried at fair value as of December 31, 2015, are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Derivative contracts-foreign currency (1) $ 6 $ 1 $ — $ 7 Investments related to the deferred compensation plan 9 — — 9 Total Assets at fair value $ 15 $ 1 $ — $ 16 Liabilities: Forward interest rate swap contracts (2) $ — $ 26 $ — $ 26 Liabilities related to the deferred compensation plan 9 — — 9 Total Liabilities at fair value $ 9 $ 26 $ — $ 35 (1) The fair value of the derivative contracts is calculated as follows: a. Fair value of a put option contract associated with forecasted sales hedges is calculated using bid and ask rates for similar contracts. b. Fair value of regular forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points. c. Fair value of hedges against net assets is calculated at the period-end exchange rate adjusted for current forward points (Level 2). If the hedge has been traded but not settled at period-end, the fair value is calculated at the rate at which the hedge is being settled (Level 1). As a result, transfers from Level 2 to Level 1 of the fair value hierarchy totaled $2 million and $6 million as of July 2, 2016 and December 31, 2015, respectively. (2) The fair value of forward interest rate swaps is based upon a valuation model that uses relevant observable market inputs at the quoted intervals, such as forward yield curves, and is adjusted for the Company’s credit risk and the interest rate swap terms. See gross balance reporting in Note 8 Derivative Instruments. The estimated fair value of the Company’s long-term debt approximated $3.0 billion and $3.1 billion at July 2, 2016 and December 31, 2015, respectively. These fair value amounts represent the estimated value at which the Company’s lenders could trade its debt within the financial markets and does not represent the settlement value of these long-term debt liabilities to the Company. The fair value of the long-term debt will continue to vary each period based on fluctuations in market interest rates, as well as changes to the Company’s credit ratings. This methodology resulted in a Level 2 classification in the fair value hierarchy. |
Inventories
Inventories | 6 Months Ended |
Jul. 02, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The components of inventories, net are as follows (in millions): July 2, December 31, Raw material $ 169 $ 178 Work in process 1 — Finished goods 264 272 Inventories, gross 434 450 Inventory reserves (72 ) (56 ) Inventories, net $ 362 $ 394 |
Other Long-Term Assets
Other Long-Term Assets | 6 Months Ended |
Jul. 02, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Long-Term Assets | Other Long-Term Assets Other long-term assets consist of the following (in millions): July 2, 2016 December 31, 2015 Long-term investments $ 32 $ 31 Long-term notes receivable 14 14 Other long-term assets 12 25 Investments related to the deferred compensation plan 10 9 Long-term trade receivable 7 11 Deposits 3 2 Total $ 78 $ 92 The long-term investments, which are accounted for using the cost method of accounting, are primarily in venture-capital backed technology companies, and the Company’s ownership interest is between 0.4% to 17.4% . Under the cost method of accounting, investments are carried at cost and are adjusted only for other-than-temporary declines in fair value, certain distributions and additional investments. |
Accrued Liabilities
Accrued Liabilities | 6 Months Ended |
Jul. 02, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued Liabilities The components of accrued liabilities are as follows (in millions): July 2, December 31, Accrued other expenses $ 120 $ 131 Accrued compensation and related benefits 53 47 Customer reserves 38 38 Accrued incentive compensation 28 62 Interest payable 22 36 Accrued warranty 21 22 Interest rate swap liability 10 3 Restructuring liability 7 9 Accrued other taxes 4 10 Total $ 303 $ 358 |
Costs Associated with Exit and
Costs Associated with Exit and Restructuring Activities | 6 Months Ended |
Jul. 02, 2016 | |
Restructuring and Related Activities [Abstract] | |
Costs Associated with Exit and Restructuring Activities | Costs Associated with Exit and Restructuring Activities Total exit and restructuring charges specific to the Company's acquisition of the Enterprise business from Motorola Solutions, Inc. ("Acquisition") in October 2014 of $56 million life-to-date have been recorded through July 2, 2016: $13 million in the Legacy Zebra segment and $43 million in the Enterprise segment related to organizational design changes and operating efficiencies. During the first six months of 2016, the Company incurred exit and restructuring costs specific to the Acquisition as follows (in millions): Cumulative costs incurred through December 31, 2015 Costs incurred for the six months ended July 2, 2016 Cumulative costs incurred through July 2, 2016 Severance, stay bonus, and other employee-related expenses $ 36 $ 9 $ 45 Obligations for future non-cancellable lease payments 9 2 11 Total $ 45 $ 11 $ 56 Exit and restructuring charges were $2 million and $3 million for the Legacy Zebra and Enterprise segments, respectively for the three month period ended July 2, 2016 and $4 million and $7 million , respectively for the six month period ended July 2, 2016. The Company expects total charges for the year ended December 31, 2016 related to the Acquisition to be in the range of $15 million to $20 million . A rollforward of the exit and restructuring accruals is as follows (in millions): Three months ended Six months ended July 2, July 4, July 2, July 4, Balance at the beginning of the period $ 13 $ 8 $ 14 $ 7 Charged to earnings 5 18 11 29 Cash paid (5 ) (8 ) (12 ) (18 ) Balance at the end of the period $ 13 $ 18 $ 13 $ 18 Liabilities related to exit and restructuring activities are included in the following accounts in the consolidated balance sheets (in millions): July 2, December 31, Accrued liabilities $ 7 $ 9 Other long-term liabilities 6 5 Total liabilities related to exit and restructuring activities $ 13 $ 14 Payments of the related long-term liabilities will be completed by October 2024. |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Jul. 02, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments The Company conducts business on a multinational basis in a wide variety of foreign currencies; as such, the Company manages these risks using derivative financial instruments. The exposure to market risk for changes in foreign currency exchange rates arises from cross-border financing activities between subsidiaries and foreign currency denominated monetary assets and liabilities. The objective is to preserve the economic value of non-functional currency denominated cash flows. Therefore, the goal is to hedge transaction exposures with natural offsets to the fullest extent possible, and once these opportunities have been exhausted, through foreign exchange forward and option contracts with third parties. The Company entered into a credit agreement which provides for a term loan of $2.2 billion (“Term Loan”) and a revolving credit facility of $250.0 million (“Revolving Credit Facility”). See Note 10 Long-Term Debt. As such, the Company has exposure to market risk for changes in interest expense calculated off of variable interest rates on the term facility that was used to fund the Acquisition. The Company entered into forward interest rate swaps to hedge a portion of the interest rate risk associated with the Term Loan. In accordance with ASC 815, “ Derivative and Hedging ,” the Company recognizes derivative instruments as either assets or liabilities on the consolidated balance sheet and measures them at fair value. Gains and losses resulting from changes in fair value are accounted for depending on the use of the derivative and whether it is designated as and qualifies for hedge accounting. The Company’s master netting and other similar arrangements with the respective counterparties allow for net settlement under certain conditions, which are designed to reduce credit risk by permitting net settlement with the same counterparty. Credit and Market Risk Financial instruments, including derivatives, expose the Company to counterparty credit risk for nonperformance and to market risk related to interest and currency exchange rates. The Company manages its exposure to counterparty credit risk through specific minimum credit standards, diversification of counterparties, and procedures to monitor concentrations of credit risk. Its counterparties in derivative transactions are commercial banks with significant experience using derivative instruments. The Company monitors the impact of market risk on the fair value and cash flows of its derivative and other financial instruments considering reasonably possible changes in interest rates and currency exchange rates and restricts the use of derivative financial instruments to hedging activities. The Company continually monitors the creditworthiness of its customers to which it grants credit terms in the normal course of business. The terms and conditions of the Company’s credit sales are designed to mitigate or eliminate concentrations of credit risk with any single customer. Non-Designated Foreign Currency Derivatives The Company uses forward contracts to manage exposure related to its British Pound, Canadian Dollar, Czech Koruna, Brazilian Real, Malaysian Ringgit, and Euro denominated net assets. Forward contracts typically mature within three months after execution of the contracts. The Company records monetary gains and losses on these contracts and options in income each quarter along with the transaction gains and losses related to its net asset positions, which would ordinarily offset each other. Summary financial information related to these activities included in the Company’s consolidated statements of operations as other (expenses) income is as follows (in millions): Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Realized gain (loss) from foreign exchange derivatives $ 2 $ (1 ) $ (3 ) $ 3 (Loss) gain on net foreign currency assets (7 ) 12 (1 ) (19 ) Foreign exchange (loss) gain $ (5 ) $ 11 $ (4 ) $ (16 ) July 2, December 31, Notional balance of outstanding contracts (in millions): British Pound/US dollar £ 3 £ 5 Euro/US dollar € 124 € 133 British Pound/Euro £ — £ 7 Canadian Dollar/US dollar $ 12 $ 5 Czech Koruna/US dollar Kč 137 Kč 140 Brazilian Real/US dollar R$ 7 R$ 28 Malaysian Ringgit/US dollar RM 114 RM 13 Net fair value of outstanding contracts (in millions) $ — $ 1 Hedging of Anticipated Sales The Company manages the exchange rate risk of anticipated Euro denominated sales using put options, forward contracts and participating forwards. The Company designates these contracts as cash flow hedges which mature within twelve months after the execution of the contracts. Gains and losses on these contracts are deferred in accumulated other comprehensive loss until the contracts are settled and the hedged sales are realized. The deferred gain or loss will then be reported as an increase or decrease to net sales. At the end of the fourth quarter of 2015, the Company expanded its hedging activities to manage the exposure from the Enterprise segment related to fluctuations of foreign currency exchange rates. The impact is reflected in the consolidated statements of comprehensive loss. Summary financial information related to the cash flow hedges within the statements of accumulated comprehensive loss is as follows (in millions): Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Change in unrealized gain (loss) on anticipated sales hedging: Gross $ 14 $ (6 ) $ (5 ) $ (4 ) Income tax expense (benefit) 3 (1 ) (1 ) (1 ) Net $ 11 $ (5 ) $ (4 ) $ (3 ) Summary financial information related to the cash flow hedges of future revenues is as follows: July 2, December 31, Notional balance of outstanding contracts versus the dollar (in millions) € 445 € 193 Hedge effectiveness 100 % 100 % Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Net (loss) gain included in revenue $ (5 ) $ 5 $ (6 ) $ 11 The Company records its foreign exchange contracts at fair value on its consolidated balance sheets as a current asset or liability, depending upon the fair value calculation as detailed in Note 3 Fair Value Measurements. The amounts recorded on the consolidated balance sheets are as follows (in millions): July 2, December 31, Assets: Prepaid expenses and other current assets $ 2 $ 7 Total $ 2 $ 7 Liabilities: Accrued liabilities $ 4 $ — Total $ 4 $ — Forward Interest Rate Swaps The Company's forward interest rate swaps hedge the interest rate risk associated with the variable interest payments on its Term Loan. The change in fair value of swaps which are designated as cash flow hedges are recognized in accumulated other comprehensive loss whereas those which were not designated in a hedging relationship are reported in the Company's consolidated statements of operations as interest expense and other, net. Any ineffectiveness is immediately recognized in earnings. The balance sheet position of the forward interest rate swaps designated in a hedge relationship is as follows (in millions, except percentages): July 2, December 31, Accrued liabilities $ 7 $ 1 Other long-term liabilities $ 24 $ 14 Hedge effectiveness 100 % 100 % The forward interest rate swaps not designated in a hedging relationship are recorded in a net liability position of $9 million as of July 2, 2016 and $11 million as of December 31, 2015 in the consolidated balance sheets. The gross fair values and related offsetting counterparty fair values as well as the net fair value amounts at July 2, 2016 were as follows (in millions): Gross Fair Value Counterparty Offsetting Net Fair Value in the Consolidated Balance Sheets Counterparty A $ 20 $ 12 $ 8 Counterparty B 7 3 4 Counterparty C 7 3 4 Counterparty D 14 6 8 Counterparty E 7 3 4 Counterparty F 8 4 4 Counterparty G 8 — 8 Total $ 71 $ 31 $ 40 Certain of the forward interest rate swaps, each with a term of 1 year, are designated as cash flow hedges of interest rate exposure associated with variability in future cash flows on the Term Loan. The notional amount of these designated swaps effective in each year of the cash flow hedge relationships does not exceed the principal amount of the Term Loan which is hedged. These swaps have the following notional amounts per year (in millions): July 2, Year 2017 $ 697 Year 2018 544 Year 2019 544 Year 2020 272 Year 2021 272 Notional balance of outstanding contracts $ 2,329 The gain/ loss recognized on the forward interest rate swaps not designated in a hedge relationship is combined with interest expense and other, net in the consolidated statements of operations is as follows (in millions): Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Interest income (expense) on forward interest rate swaps $ 1 $ (2 ) $ 2 $ — The unrealized gain/loss recognized in other comprehensive loss on the forward interest rate swaps designated in a hedging relationship is as follows (in millions): Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Change in unrealized loss (gain) on forward interest rate swap hedging: Gross $ (5 ) $ 5 $ (15 ) $ (7 ) Income tax (benefit) expense (2 ) 2 (5 ) (3 ) Net $ (3 ) $ 3 $ (10 ) $ (4 ) Losses of zero and $1 million were reclassified from accumulated other comprehensive loss into interest expense and other, net on the forward interest rate swaps designated in a hedging relationship during the three and six month periods ended July 2, 2016, respectively. There were no significant reclassifications during the three or six month periods ended July 4, 2015. At July 2, 2016, the Company expects that approximately $21 million in losses on the forward interest rate swaps designated in a hedging relationship that will be reclassified from accumulated other comprehensive loss into earnings during the next 4 quarters. |
Warranty
Warranty | 6 Months Ended |
Jul. 02, 2016 | |
Product Warranties Disclosures [Abstract] | |
Warranty | Warranty In general, the Company provides warranty coverage of 1 year on mobile computers and WLAN products. Advanced data capture products are warrantied from 1 to 5 years, depending on the product. Printers are warrantied for 1 year against defects in material and workmanship. Thermal printheads are warranted for 6 months and batteries are warrantied for 1 year. Battery-based products, such as location tags, are covered by a 90 -day warranty. The provision for warranty expense is adjusted quarterly based on historical warranty experience. The following table is a summary of the Company’s accrued warranty obligation (in millions): Six Months Ended July 2, 2016 July 4, 2015 Balance at the beginning of the period $ 22 $ 25 Warranty expense 14 16 Warranty payments (15 ) (16 ) Balance at the end of the period $ 21 $ 25 |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jul. 02, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt The following table summarizes the carrying value of the Company’s long-term debt (in millions): July 2, 2016 December 31, 2015 7.25% Senior Notes due 2022 $ 1,050 $ 1,050 4.00% Term Loan due 2021 1,890 2,035 3.25% Revolving Credit Facility — — Less: debt issuance costs (24 ) (26 ) Less: unamortized discounts (43 ) (47 ) Long-term debt $ 2,873 $ 3,012 During 2014, the Company entered into a credit agreement which provides for a term loan of $2.2 billion and a revolving credit facility of $250.0 million . Borrowings under this agreement bear interest at a variable rate plus an applicable margin, subject to an all-in floor of 4.00% . As of July 2, 2016, the Term Loan interest rate was 4.00% . Interest payments are payable quarterly. The Company has also entered into interest rate swaps to manage interest rate risk on its long-term debt. The Company is required to make a final scheduled principal payment of $1.89 billion due on October 27, 2021. Additionally, the Company may make optional prepayments of the Term Loan, in whole or in part, without premium or penalty. The Company made optional principal prepayments of $145 million during the six months ended July 2, 2016. Borrowings under the Revolving Credit Facility bear interest at a variable rate plus an applicable margin. As of July 2, 2016, the Revolving Credit Facility interest rate was 3.25% . Interest payments are payable quarterly. As of July 2, 2016, the Company had established letters of credit amounting to $4 million , which reduced funds available for other borrowings under the agreement to $246 million . On June 2, 2016 (the "Closing Date"), the Company entered into the first amendment to our existing Term Loan credit agreement dated as of October 27, 2014 (the "Refinancing Amendment"). The Refinancing Amendment lowered the index rate spread for LIBOR loans from LIBOR + 400 bp to LIBOR + 325 bp. In accounting for the Refinancing Amendment, the Company applied the provisions of ASC Subtopic 470-50, Modifications and Extinguishments (“ASC 470-50”). The evaluation of the accounting under ASC 470-50 was done on a creditor by creditor basis in order to determine if the terms of the debt were substantially different and, as a result, whether to apply modification or extinguishment accounting. It was determined that the terms of the debt were not substantially different for approximately 96.6% of the lenders, and applied modification accounting. For the remaining 3.4% of the lenders, extinguishment accounting was applied. During the three months ended July 2, 2016, the Company recorded a $2.7 million charge to interest expense & other, net, primarily related to costs incurred with third parties for arranger, legal and other services and the unamortized fees related to the extinguished debt. Additionally, the Company paid $4.9 million to the creditors in exchange for the modification and reported it as a debt discount which is being amortized over the life of the modified debt using the interest method. |
Contingencies
Contingencies | 6 Months Ended |
Jul. 02, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies The Company is subject to a variety of investigations, claims, suits and other legal proceedings that arise from time to time in the ordinary course of business, including but not limited to, intellectual property, employment, tort and breach of contract matters. The Company currently believes that the outcomes of such proceedings, individually and in the aggregate, will not have a material adverse impact on its business, cash flows, financial position, or results of operations. Any legal proceedings are subject to inherent uncertainties, and the Company's view of these matters and its potential effects may change in the future. In connection with the acquisition of the Enterprise business from Motorola Solutions, Inc., the Company acquired Symbol Technologies, Inc., a subsidiary of Motorola Solutions (“Symbol”). A putative federal class action lawsuit, Waring v. Symbol Technologies, Inc., et al. , was filed on August 16, 2005 against Symbol Technologies, Inc. and two of its former officers in the United States District Court for the Eastern District of New York by Robert Waring. After the filing of the Waring action, several additional purported class actions were filed against Symbol and the same former officers making substantially similar allegations (collectively, the New Class Actions”). The Waring action and the New Class Actions were consolidated for all purposes and on April 26, 2006, the Court appointed the Iron Workers Local # 580 Pension Fund as lead plaintiff and approved its retention of lead counsel on behalf of the putative class. On August 30, 2006, the lead plaintiff filed a Consolidated Amended Class Action Complaint (the “Amended Complaint”), and named additional former officers and directors of Symbol as defendants. The lead plaintiff alleges that the defendants misrepresented the effectiveness of Symbol’s internal controls and forecasting processes, and that, as a result, all of the defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and the individual defendants violated Section 20(a) of the Exchange Act. The lead plaintiff alleges that it was damaged by the decline in the price of Symbol’s stock following certain purported corrective disclosures and seeks unspecified damages. The court has certified a class of investors that includes those that purchased Symbol common stock between March 12, 2004 and August 1, 2005. The parties have substantially completed fact and expert discovery. However, there are certain discovery motions pending that could, if granted, reopen fact discovery. The court has held in abeyance all other deadlines, including the deadline for the filing of dispositive motions, and has not set a date for trial. One of the insurers in our insurance group has denied insurance coverage and is not agreeing to reimburse defense costs incurred by the Company in connection with this matter. The Company is pursuing the actions it deems necessary and reasonable to obtain reimbursement of its defense costs from the insurer. The Company establishes an accrued liability for loss contingencies related to legal matters when the loss is both probable and estimable. In addition, for some matters for which a loss is probable or reasonably possible, an estimate of the amount of loss or range of loss is not possible, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies. Currently, the Company is unable to reasonably estimate the amount of reasonably possible losses for the above mentioned matter. |
Loss per Share
Loss per Share | 6 Months Ended |
Jul. 02, 2016 | |
Earnings Per Share [Abstract] | |
Loss per Share | Loss per Share Loss per share were computed as follows (in millions, except share data): Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Weighted average shares: Basic weighted average shares outstanding 51,533,236 50,917,161 51,405,373 50,798,238 Effect of dilutive securities outstanding — — — — Diluted weighted average and equivalent shares outstanding 51,533,236 50,917,161 51,405,373 50,798,238 Net loss $ (49 ) $ (77 ) $ (78 ) $ (102 ) Basic per share amounts: Basic weighted average shares outstanding 51,533,236 50,917,161 51,405,373 50,798,238 Per share amount $ (0.95 ) $ (1.50 ) $ (1.51 ) $ (2.00 ) Diluted per share amounts: Diluted weighted average shares outstanding 51,533,236 50,917,161 51,405,373 50,798,238 Per share amount $ (0.95 ) $ (1.50 ) $ (1.51 ) $ (2.00 ) Anti-dilutive securities consist primarily of stock appreciation rights (SARs) with an exercise price greater than the average market closing price of the Class A common stock. Due to net losses in both the second quarter and first half of 2016 and 2015, options, awards and warrants were anti-dilutive and therefore excluded from the earnings per share calculation. These excluded outstanding options, awards and warrants are as follows: Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Potentially dilutive shares 1,313,435 1,152,707 1,356,668 1,018,482 |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jul. 02, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation The Company has share-based compensation and employee stock purchase plans under which shares of the Company’s Class A common stock are available for future grants and sales. Pre-tax share-based compensation expense recognized in the statements of operations was $12 million and $18 million for the six-month periods ended July 2, 2016 and July 4, 2015, respectively. Tax related benefits of $4 million and $6 million were also recognized for the six-month periods ended July 2, 2016 and July 4, 2015, respectively. The fair value of share-based compensation is estimated on the date of grant using a binomial model. Volatility is based on an average of the implied volatility in the open market and the annualized volatility of the Company’s stock price over its entire stock history. Stock option grants in the table below include both stock options, all of which were non-qualified, and stock appreciation rights that will be settled in the Class A common stock or cash. Restricted stock grants are valued at the market closing price on the grant date. The following table shows the weighted-average assumptions used for grants of SARs as well as the fair value based on those assumptions: Six Months Ended July 2, 2016 July 4, 2015 Expected dividend yield 0% 0% Forfeiture rate 9.01% 10.24% Volatility 43.14% 33.98% Risk free interest rate 1.29% 1.53% Range of interest rates 0.25% - 1.75% 0.02% - 2.14% Expected weighted-average life 5.33 years 5.32 years Fair value of SARs granted (in millions) $ 12 $ 11 Weighted-average grant date fair value of SARs granted $ 19.95 $ 35.25 SARs activity was as follows: Six Months Ended July 2, 2016 SARs Shares Weighted- Outstanding at beginning of period 1,397,611 $ 56.78 Granted 607,846 51.55 Exercised (39,830 ) 40.06 Forfeited (40,539 ) 64.66 Expired (1,417 ) 74.72 Outstanding at end of period 1,923,671 55.14 Exercisable at end of period 946,826 43.73 Intrinsic value of exercised SARs (in millions) $ 1 The following table summarizes information about SARs outstanding at July 2, 2016: July 2, 2016 Outstanding Exercisable Aggregate intrinsic value (in millions) $ 26 $ 20 Weighted-average remaining contractual term 7.4 years 5.4 years Restricted stock award activity was as follows: Six Months Ended July 2, 2016 Restricted Stock Awards Shares Weighted-Average Outstanding at beginning of period 566,447 $ 77.68 Granted 377,017 51.38 Released (223,318 ) 55.74 Forfeited (18,520 ) 73.58 Outstanding at end of period 701,626 70.47 Performance stock award activity was as follows: Six Months Ended July 2, 2016 Performance Stock Awards Shares Weighted-Average Outstanding at beginning of period 332,630 $ 73.40 Granted 179,385 50.36 Released (108,371 ) 46.07 Forfeited (6,363 ) 71.33 Outstanding at end of period 397,281 70.18 Restricted stock unit activity was as follows: Six Months Ended July 2, 2016 Restricted Stock Units Shares Outstanding at beginning of period 38,746 Granted 31,194 Exercised (7,585 ) Forfeited (1,485 ) Outstanding at end of period 60,870 There were no stock options and performance stock unit grants issued during the six months ended July 2, 2016. As of July 2, 2016, total unearned compensation costs related to the Company’s share-based compensation plans was $61 million which will be amortized over the weighted average remaining service period of 3.3 years. The fair value of the purchase rights issued to employees under the stock purchase plan is estimated using the following weighted-average assumptions for purchase rights granted. An expected life of 3 months was used to calculate the fair value. Six Months Ended July 2, July 4, Fair market value $ 60.28 $ 82.68 Option price $ 57.26 $ 78.55 Expected dividend yield 0 % 0 % Expected volatility 58 % 27 % Risk free interest rate 0.21 % 0.04 % |
Income Taxes
Income Taxes | 6 Months Ended |
Jul. 02, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rate for the six month periods ended July 2, 2016 and July 4, 2015 were 6.2% and 8.4% , respectively. The Company’s effective tax rate differed from the federal statutory rate of 35% primarily due to the taxation of foreign earnings at lower rates, increases to valuation allowances and discrete items, which includes an out of period adjustment. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 6 Months Ended |
Jul. 02, 2016 | |
Equity [Abstract] | |
Other Comprehensive Loss | Other Comprehensive Loss Stockholders’ equity includes certain items classified as accumulated other comprehensive loss, including: Unrealized (loss) gain on anticipated sales hedging transactions relate to derivative instruments used to hedge the exposure related to currency exchange rates for forecasted Euro sales. These hedges are designated as cash flow hedges, and the Company defers income statement recognition of gains and losses until the hedged transaction occurs. See Note 8 Derivative Instruments. • Unrealized (loss) gain on forward interest rate swaps hedging transactions refer to the hedging of the interest rate risk exposure associated with the variable rate commitment entered into for the Acquisition. See Note 8 Derivative Instruments for more details. • Foreign currency translation adjustment relates to the Company's non-U.S. subsidiary companies that have designated a functional currency other than the U.S. dollar. The Company is required to translate the subsidiary functional currency financial statements to dollars using a combination of historical, period-end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of accumulated other comprehensive income. The components of accumulated other comprehensive loss ("AOCI") for the 6 months ended July 2, 2016 and July 4, 2015 are as follows (in millions): Unrealized (losses) gain on sales hedging Unrealized (losses)/ gains on forward interest rate swaps (1) Currency translation adjustments Total Balance at December 31, 2014 $ 5 $ (8 ) $ (6 ) $ (9 ) Other comprehensive income (loss) before reclassifications 7 (7 ) (3 ) (3 ) Amounts reclassified from AOCI to income (11 ) — (7 ) (18 ) Tax benefit 1 3 — 4 Other comprehensive loss (3 ) (4 ) (10 ) (17 ) Balance at July 4, 2015 $ 2 $ (12 ) $ (16 ) $ (26 ) Balance at December 31, 2015 $ (1 ) $ (15 ) $ (33 ) $ (49 ) Other comprehensive loss before reclassifications (11 ) (16 ) (1 ) (28 ) Amounts reclassified from AOCI to income 6 1 — 7 Tax benefit 1 5 — 6 Other comprehensive loss (4 ) (10 ) (1 ) (15 ) Balance at July 2, 2016 $ (5 ) $ (25 ) $ (34 ) $ (64 ) (1) See Note 8 Derivatives Instruments regarding timing of reclassifications. Reclassification out of AOCI to earnings during the 6 months ended July 2, 2016 and July 4, 2015 were as follows (in millions): Three Months Ended Six Months Ended July 2, July 4, July 2, July 4, Comprehensive Income Components Financial Statement Line Item Unrealized losses (gains) on sales hedging: Total before tax Net sales of tangible products $ 5 $ (5 ) $ 6 $ (11 ) Tax (benefit) expense (1 ) 1 (1 ) 2 Net of taxes 4 (4 ) 5 (9 ) Unrealized losses (gains) on forward interest rate swaps: Total before tax Interest expense and other, net — — 1 — Tax expense (benefit) — — — — Net of taxes — — 1 — Currency translation adjustments Foreign exchange loss (gain) — (7 ) — (7 ) Total amounts reclassified from AOCI $ 4 $ (11 ) $ 6 $ (16 ) |
Segment Information
Segment Information | 6 Months Ended |
Jul. 02, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company has 2 reportable segments: Legacy Zebra and Enterprise. The operating segments have been identified based on the financial data utilized by the Company's Chief Executive Officer (the chief operating decision maker) to assess segment performance and allocate resources among the Company's segments. The chief operating decision maker uses adjusted operating income to assess segment profitability. Adjusted operating income excludes purchase accounting adjustments, amortization, acquisition, integration and exit and restructuring costs. Segment assets are not reviewed by the Company's chief operating decision maker and therefore are not disclosed below. Financial information by segment is presented as follows (in millions): Three Months Ended Six Months Ended July 2, July 4, July 2, July 4, Net sales: Legacy Zebra $ 305 $ 320 $ 618 $ 652 Enterprise 577 574 1,114 1,141 Total segment 882 894 1,732 1,793 Corporate, eliminations (1) (3 ) (4 ) (6 ) (10 ) Total $ 879 $ 890 $ 1,726 $ 1,783 Operating income: Legacy Zebra $ 57 $ 62 $ 126 $ 139 Enterprise 68 43 104 97 Total segment 125 105 230 236 Corporate, eliminations (2) (103 ) (119 ) (208 ) (230 ) Total $ 22 $ (14 ) $ 22 $ 6 (1) Amounts included in Corporate, eliminations consist of purchase accounting adjustments not reported in segments related to the Acquisition. (2) Amounts included in Corporate, eliminations consist of purchase accounting adjustments not reported in segments; amortization expense, acquisition and integration expenses and exit and restructuring costs. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements (Policies) | 6 Months Ended |
Jul. 02, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncement In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-5, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” This update provides guidance to customers about whether a cloud computing arrangement includes a software license or should be accounted for differently. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance does not change generally accepted accounting principles for a customer’s accounting for service contracts. This update is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. The Company has prospectively adopted this new standard on January 1, 2016 and concluded that it does not have a material impact on its consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued ASU 2014-09, “ Revenue from Contracts with Customers (Topic 606) .” The core principle is that a company should recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In March 2016, the FASB issued ASU 2016-08, “ Principal versus Agent Considerations (Reporting revenue gross versus net) ,” which clarifies gross versus net revenue reporting when another party is involved in the transaction. In April 2016, the FASB issued ASU 2016-10, “ Identifying Performance Obligations and Licensing ,” which amends the revenue guidance on identifying performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB issued ASU 2016-11, “ Rescission of SEC Guidance Because of ASU 2014-09 Pursuant to Staff Announcement at March 3, 2016 EITF Meeting, ” which rescinds certain SEC Staff Observer comments upon adoption of Topic 606. In May 2016, the FASB also issued ASU 2016-12, “ Narrow-Scope Improvements and Practical Expedients, ” which provides certain improvements and practical expedients in the interpretation and application of this topic. There are two transition methods available under the new standard, either cumulative effect or retrospective. These standards will be effective for the Company in the first quarter of 2018. Earlier adoption is permitted only for annual periods after December 15, 2016. Management is still assessing the impact of adoption on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory, ” which changes the measurement principle for inventory from the lower of cost or market to the lower of cost or net realizable value for entities that measure inventory using first-in, first-out (FIFO) or average cost. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for the Company in the first quarter of 2017. Earlier adoption is permitted and the guidance must be applied prospectively after the date of adoption. Management is still assessing the impact of adoption on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, ” which provides for simplification of certain aspects of employee share-based payment accounting including income taxes, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard will be effective for the Company in the first quarter of 2017 and will be applied either prospectively, retrospectively or using a modified retrospective transition approach depending on the area covered in this update. Earlier adoption is permitted. Management is still assessing the impact of adoption on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ” ASU 2016-01 amends various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. With respect to the Company's consolidated financial statements, the most significant impact relates to the accounting for equity investments. This standard will be effective for the Company in the first quarter of 2018. Early adoption is prohibited for those provisions that apply to the Company. Amendments should be applied by means of cumulative effect adjustment to the consolidated balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values including disclosure requirements should be applied prospectively to equity investments that exist as of the date of adoption of the ASU. Management is still assessing the impact of adoption on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “ Leases (Subtopic 842). ” This ASU increases the transparency and comparability of organizations by recognizing lease assets and liabilities on the consolidated balance sheet and disclosing key quantitative and qualitative information about leasing arrangements. The principal difference from previous guidance is that the lease assets and lease liabilities arising from operating leases were not previously recognized in the consolidated balance sheet. The recognition, measurement, presentation and cash flows arising from a lease by a lessee have not significantly changed. This standard will be effective for the Company in the first quarter of 2019, with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, which includes a number of optional practical expedients that entities may elect to apply. Management is currently assessing the impact of adoption on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments-Credit Losses (Topic 326) No. 2016-13-Measurement of Credit Losses on Financial Instruments. ” The new standard requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. There are two transition methods available under the new standard dependent upon the type of financial instrument, either cumulative effect or prospective. The standard will be effective for the Company in the first quarter of 2020. Earlier adoption is permitted only for annual periods after December 15, 2018. Management is currently assessing the impact of adoption on its consolidated financial statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Fair Value Disclosures [Abstract] | |
Financial Assets and Liabilities Carried at Fair Value | Financial assets and liabilities carried at fair value as of July 2, 2016, are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Derivative contracts-foreign currency (1) $ 2 $ — $ — $ 2 Investments related to the deferred compensation plan 10 — — 10 Total Assets at fair value $ 12 $ — $ — $ 12 Liabilities: Forward interest rate swap contracts (2) $ — $ 40 $ — $ 40 Derivative contracts-foreign currency (1) — 4 — 4 Liabilities related to the deferred compensation plan 10 — — 10 Total Liabilities at fair value $ 10 $ 44 $ — $ 54 Financial assets and liabilities carried at fair value as of December 31, 2015, are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Derivative contracts-foreign currency (1) $ 6 $ 1 $ — $ 7 Investments related to the deferred compensation plan 9 — — 9 Total Assets at fair value $ 15 $ 1 $ — $ 16 Liabilities: Forward interest rate swap contracts (2) $ — $ 26 $ — $ 26 Liabilities related to the deferred compensation plan 9 — — 9 Total Liabilities at fair value $ 9 $ 26 $ — $ 35 (1) The fair value of the derivative contracts is calculated as follows: a. Fair value of a put option contract associated with forecasted sales hedges is calculated using bid and ask rates for similar contracts. b. Fair value of regular forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points. c. Fair value of hedges against net assets is calculated at the period-end exchange rate adjusted for current forward points (Level 2). If the hedge has been traded but not settled at period-end, the fair value is calculated at the rate at which the hedge is being settled (Level 1). As a result, transfers from Level 2 to Level 1 of the fair value hierarchy totaled $2 million and $6 million as of July 2, 2016 and December 31, 2015, respectively. (2) The fair value of forward interest rate swaps is based upon a valuation model that uses relevant observable market inputs at the quoted intervals, such as forward yield curves, and is adjusted for the Company’s credit risk and the interest rate swap terms. See gross balance reporting in Note 8 Derivative Instruments. |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Inventory Disclosure [Abstract] | |
Components of Inventories, Net | The components of inventories, net are as follows (in millions): July 2, December 31, Raw material $ 169 $ 178 Work in process 1 — Finished goods 264 272 Inventories, gross 434 450 Inventory reserves (72 ) (56 ) Inventories, net $ 362 $ 394 |
Other Long-Term Assets (Tables)
Other Long-Term Assets (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Components of Other Long-Term Assets | Other long-term assets consist of the following (in millions): July 2, 2016 December 31, 2015 Long-term investments $ 32 $ 31 Long-term notes receivable 14 14 Other long-term assets 12 25 Investments related to the deferred compensation plan 10 9 Long-term trade receivable 7 11 Deposits 3 2 Total $ 78 $ 92 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Payables and Accruals [Abstract] | |
Components of Accrued Liabilities | The components of accrued liabilities are as follows (in millions): July 2, December 31, Accrued other expenses $ 120 $ 131 Accrued compensation and related benefits 53 47 Customer reserves 38 38 Accrued incentive compensation 28 62 Interest payable 22 36 Accrued warranty 21 22 Interest rate swap liability 10 3 Restructuring liability 7 9 Accrued other taxes 4 10 Total $ 303 $ 358 |
Costs Associated with Exit an28
Costs Associated with Exit and Restructuring Activities (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Restructuring and Related Activities [Abstract] | |
Summary of Exit and Restructuring Costs Incurred | During the first six months of 2016, the Company incurred exit and restructuring costs specific to the Acquisition as follows (in millions): Cumulative costs incurred through December 31, 2015 Costs incurred for the six months ended July 2, 2016 Cumulative costs incurred through July 2, 2016 Severance, stay bonus, and other employee-related expenses $ 36 $ 9 $ 45 Obligations for future non-cancellable lease payments 9 2 11 Total $ 45 $ 11 $ 56 |
Rollforward of Exit and Restructuring Accruals | A rollforward of the exit and restructuring accruals is as follows (in millions): Three months ended Six months ended July 2, July 4, July 2, July 4, Balance at the beginning of the period $ 13 $ 8 $ 14 $ 7 Charged to earnings 5 18 11 29 Cash paid (5 ) (8 ) (12 ) (18 ) Balance at the end of the period $ 13 $ 18 $ 13 $ 18 |
Schedule of Liabilities Related to Exit and Restructuring Activities Included in Consolidated Balance Sheets | Liabilities related to exit and restructuring activities are included in the following accounts in the consolidated balance sheets (in millions): July 2, December 31, Accrued liabilities $ 7 $ 9 Other long-term liabilities 6 5 Total liabilities related to exit and restructuring activities $ 13 $ 14 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Financial Information Related to Hedging of Net Assets Included in Consolidated Statements of Operations | Summary financial information related to these activities included in the Company’s consolidated statements of operations as other (expenses) income is as follows (in millions): Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Realized gain (loss) from foreign exchange derivatives $ 2 $ (1 ) $ (3 ) $ 3 (Loss) gain on net foreign currency assets (7 ) 12 (1 ) (19 ) Foreign exchange (loss) gain $ (5 ) $ 11 $ (4 ) $ (16 ) July 2, December 31, Notional balance of outstanding contracts (in millions): British Pound/US dollar £ 3 £ 5 Euro/US dollar € 124 € 133 British Pound/Euro £ — £ 7 Canadian Dollar/US dollar $ 12 $ 5 Czech Koruna/US dollar Kč 137 Kč 140 Brazilian Real/US dollar R$ 7 R$ 28 Malaysian Ringgit/US dollar RM 114 RM 13 Net fair value of outstanding contracts (in millions) $ — $ 1 |
Financial Information Related to Cash Flow Hedges | Summary financial information related to the cash flow hedges within the statements of accumulated comprehensive loss is as follows (in millions): Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Change in unrealized gain (loss) on anticipated sales hedging: Gross $ 14 $ (6 ) $ (5 ) $ (4 ) Income tax expense (benefit) 3 (1 ) (1 ) (1 ) Net $ 11 $ (5 ) $ (4 ) $ (3 ) |
Financial Information Related to Cash Flow Hedges of Future Revenues | Summary financial information related to the cash flow hedges of future revenues is as follows: July 2, December 31, Notional balance of outstanding contracts versus the dollar (in millions) € 445 € 193 Hedge effectiveness 100 % 100 % Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Net (loss) gain included in revenue $ (5 ) $ 5 $ (6 ) $ 11 |
Forward Contract Amounts Recorded in Consolidated Balance Sheet | The amounts recorded on the consolidated balance sheets are as follows (in millions): July 2, December 31, Assets: Prepaid expenses and other current assets $ 2 $ 7 Total $ 2 $ 7 Liabilities: Accrued liabilities $ 4 $ — Total $ 4 $ — |
Schedule of Gross and Net Amount Offset | The gross fair values and related offsetting counterparty fair values as well as the net fair value amounts at July 2, 2016 were as follows (in millions): Gross Fair Value Counterparty Offsetting Net Fair Value in the Consolidated Balance Sheets Counterparty A $ 20 $ 12 $ 8 Counterparty B 7 3 4 Counterparty C 7 3 4 Counterparty D 14 6 8 Counterparty E 7 3 4 Counterparty F 8 4 4 Counterparty G 8 — 8 Total $ 71 $ 31 $ 40 |
Schedule of Series of Forward Starting Swaps Each with a Term of One Year | These swaps have the following notional amounts per year (in millions): July 2, Year 2017 $ 697 Year 2018 544 Year 2019 544 Year 2020 272 Year 2021 272 Notional balance of outstanding contracts $ 2,329 |
Forward Interest Rate Swap | |
Forward Contract Amounts Recorded in Consolidated Balance Sheet | The balance sheet position of the forward interest rate swaps designated in a hedge relationship is as follows (in millions, except percentages): July 2, December 31, Accrued liabilities $ 7 $ 1 Other long-term liabilities $ 24 $ 14 Hedge effectiveness 100 % 100 % |
Schedule of Gain (Loss) Recognized on Forward Interest Rate Swaps Not Designated in Hedge Relationship | The gain/ loss recognized on the forward interest rate swaps not designated in a hedge relationship is combined with interest expense and other, net in the consolidated statements of operations is as follows (in millions): Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Interest income (expense) on forward interest rate swaps $ 1 $ (2 ) $ 2 $ — |
Schedule of Loss Recognized in Other Comprehensive Unrealized Loss on Forward Interest Rate Swaps Designated in Hedging Relationship | The unrealized gain/loss recognized in other comprehensive loss on the forward interest rate swaps designated in a hedging relationship is as follows (in millions): Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Change in unrealized loss (gain) on forward interest rate swap hedging: Gross $ (5 ) $ 5 $ (15 ) $ (7 ) Income tax (benefit) expense (2 ) 2 (5 ) (3 ) Net $ (3 ) $ 3 $ (10 ) $ (4 ) |
Warranty (Tables)
Warranty (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Product Warranties Disclosures [Abstract] | |
Summary of Accrued Warranty Obligation | The following table is a summary of the Company’s accrued warranty obligation (in millions): Six Months Ended July 2, 2016 July 4, 2015 Balance at the beginning of the period $ 22 $ 25 Warranty expense 14 16 Warranty payments (15 ) (16 ) Balance at the end of the period $ 21 $ 25 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Debt Disclosure [Abstract] | |
Summary of Carrying Value of Debt | The following table summarizes the carrying value of the Company’s long-term debt (in millions): July 2, 2016 December 31, 2015 7.25% Senior Notes due 2022 $ 1,050 $ 1,050 4.00% Term Loan due 2021 1,890 2,035 3.25% Revolving Credit Facility — — Less: debt issuance costs (24 ) (26 ) Less: unamortized discounts (43 ) (47 ) Long-term debt $ 2,873 $ 3,012 |
Loss per Share (Tables)
Loss per Share (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Earnings Per Share [Abstract] | |
Computation of Earnings Per Share | Loss per share were computed as follows (in millions, except share data): Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Weighted average shares: Basic weighted average shares outstanding 51,533,236 50,917,161 51,405,373 50,798,238 Effect of dilutive securities outstanding — — — — Diluted weighted average and equivalent shares outstanding 51,533,236 50,917,161 51,405,373 50,798,238 Net loss $ (49 ) $ (77 ) $ (78 ) $ (102 ) Basic per share amounts: Basic weighted average shares outstanding 51,533,236 50,917,161 51,405,373 50,798,238 Per share amount $ (0.95 ) $ (1.50 ) $ (1.51 ) $ (2.00 ) Diluted per share amounts: Diluted weighted average shares outstanding 51,533,236 50,917,161 51,405,373 50,798,238 Per share amount $ (0.95 ) $ (1.50 ) $ (1.51 ) $ (2.00 ) |
Potentially Dilutive Securities Excluded from Earnings Per Share Calculation | Due to net losses in both the second quarter and first half of 2016 and 2015, options, awards and warrants were anti-dilutive and therefore excluded from the earnings per share calculation. These excluded outstanding options, awards and warrants are as follows: Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Potentially dilutive shares 1,313,435 1,152,707 1,356,668 1,018,482 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Weighted-Average Assumptions Used for Grants of Stock Options and SARs | The following table shows the weighted-average assumptions used for grants of SARs as well as the fair value based on those assumptions: Six Months Ended July 2, 2016 July 4, 2015 Expected dividend yield 0% 0% Forfeiture rate 9.01% 10.24% Volatility 43.14% 33.98% Risk free interest rate 1.29% 1.53% Range of interest rates 0.25% - 1.75% 0.02% - 2.14% Expected weighted-average life 5.33 years 5.32 years Fair value of SARs granted (in millions) $ 12 $ 11 Weighted-average grant date fair value of SARs granted $ 19.95 $ 35.25 |
Summary of SARs Activity | SARs activity was as follows: Six Months Ended July 2, 2016 SARs Shares Weighted- Outstanding at beginning of period 1,397,611 $ 56.78 Granted 607,846 51.55 Exercised (39,830 ) 40.06 Forfeited (40,539 ) 64.66 Expired (1,417 ) 74.72 Outstanding at end of period 1,923,671 55.14 Exercisable at end of period 946,826 43.73 Intrinsic value of exercised SARs (in millions) $ 1 |
Schedule of Outstanding and Exercisable Options | The following table summarizes information about SARs outstanding at July 2, 2016: July 2, 2016 Outstanding Exercisable Aggregate intrinsic value (in millions) $ 26 $ 20 Weighted-average remaining contractual term 7.4 years 5.4 years |
Summary of Restricted Stock Award Activity | Restricted stock award activity was as follows: Six Months Ended July 2, 2016 Restricted Stock Awards Shares Weighted-Average Outstanding at beginning of period 566,447 $ 77.68 Granted 377,017 51.38 Released (223,318 ) 55.74 Forfeited (18,520 ) 73.58 Outstanding at end of period 701,626 70.47 |
Summary of Performance Share Award Activity | Performance stock award activity was as follows: Six Months Ended July 2, 2016 Performance Stock Awards Shares Weighted-Average Outstanding at beginning of period 332,630 $ 73.40 Granted 179,385 50.36 Released (108,371 ) 46.07 Forfeited (6,363 ) 71.33 Outstanding at end of period 397,281 70.18 Restricted stock unit activity was as follows: Six Months Ended July 2, 2016 Restricted Stock Units Shares Outstanding at beginning of period 38,746 Granted 31,194 Exercised (7,585 ) Forfeited (1,485 ) Outstanding at end of period 60,870 |
Weighted-Average Assumptions Used for Employee Purchase Rights Granted Under Stock Purchase Plan | The fair value of the purchase rights issued to employees under the stock purchase plan is estimated using the following weighted-average assumptions for purchase rights granted. An expected life of 3 months was used to calculate the fair value. Six Months Ended July 2, July 4, Fair market value $ 60.28 $ 82.68 Option price $ 57.26 $ 78.55 Expected dividend yield 0 % 0 % Expected volatility 58 % 27 % Risk free interest rate 0.21 % 0.04 % |
Accumulated Other Comprehensi34
Accumulated Other Comprehensive Loss (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Equity [Abstract] | |
Components of Accumulated Other Comprehensive (Loss) Income (AOCI) | The components of accumulated other comprehensive loss ("AOCI") for the 6 months ended July 2, 2016 and July 4, 2015 are as follows (in millions): Unrealized (losses) gain on sales hedging Unrealized (losses)/ gains on forward interest rate swaps (1) Currency translation adjustments Total Balance at December 31, 2014 $ 5 $ (8 ) $ (6 ) $ (9 ) Other comprehensive income (loss) before reclassifications 7 (7 ) (3 ) (3 ) Amounts reclassified from AOCI to income (11 ) — (7 ) (18 ) Tax benefit 1 3 — 4 Other comprehensive loss (3 ) (4 ) (10 ) (17 ) Balance at July 4, 2015 $ 2 $ (12 ) $ (16 ) $ (26 ) Balance at December 31, 2015 $ (1 ) $ (15 ) $ (33 ) $ (49 ) Other comprehensive loss before reclassifications (11 ) (16 ) (1 ) (28 ) Amounts reclassified from AOCI to income 6 1 — 7 Tax benefit 1 5 — 6 Other comprehensive loss (4 ) (10 ) (1 ) (15 ) Balance at July 2, 2016 $ (5 ) $ (25 ) $ (34 ) $ (64 ) (1) See Note 8 Derivatives Instruments regarding timing of reclassifications. |
Reclassification Out of AOCI to Earnings | Reclassification out of AOCI to earnings during the 6 months ended July 2, 2016 and July 4, 2015 were as follows (in millions): Three Months Ended Six Months Ended July 2, July 4, July 2, July 4, Comprehensive Income Components Financial Statement Line Item Unrealized losses (gains) on sales hedging: Total before tax Net sales of tangible products $ 5 $ (5 ) $ 6 $ (11 ) Tax (benefit) expense (1 ) 1 (1 ) 2 Net of taxes 4 (4 ) 5 (9 ) Unrealized losses (gains) on forward interest rate swaps: Total before tax Interest expense and other, net — — 1 — Tax expense (benefit) — — — — Net of taxes — — 1 — Currency translation adjustments Foreign exchange loss (gain) — (7 ) — (7 ) Total amounts reclassified from AOCI $ 4 $ (11 ) $ 6 $ (16 ) |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Segment Reporting [Abstract] | |
Segment Information by Reportable Segments | Financial information by segment is presented as follows (in millions): Three Months Ended Six Months Ended July 2, July 4, July 2, July 4, Net sales: Legacy Zebra $ 305 $ 320 $ 618 $ 652 Enterprise 577 574 1,114 1,141 Total segment 882 894 1,732 1,793 Corporate, eliminations (1) (3 ) (4 ) (6 ) (10 ) Total $ 879 $ 890 $ 1,726 $ 1,783 Operating income: Legacy Zebra $ 57 $ 62 $ 126 $ 139 Enterprise 68 43 104 97 Total segment 125 105 230 236 Corporate, eliminations (2) (103 ) (119 ) (208 ) (230 ) Total $ 22 $ (14 ) $ 22 $ 6 (1) Amounts included in Corporate, eliminations consist of purchase accounting adjustments not reported in segments related to the Acquisition. (2) Amounts included in Corporate, eliminations consist of purchase accounting adjustments not reported in segments; amortization expense, acquisition and integration expenses and exit and restructuring costs. |
Description of Business and B36
Description of Business and Basis of Presentation (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Operating expenses | $ 384 | $ 407 | $ 774 | $ 796 |
Net loss | $ 49 | $ 77 | 78 | $ 102 |
Correction Of Underaccrued Estimations | Restatement Adjustment | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Operating expenses | 11 | |||
Net loss | $ 6.6 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Assets and Liabilities Carried at Fair Value (Detail) - USD ($) $ in Millions | Jul. 02, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | $ 12 | $ 16 |
Total Liabilities at fair value | 54 | 35 |
Fair value, assets, Level 2 to Level 1 transfers, amount | 6 | |
Long-term debt, fair value | 3,000 | 3,100 |
Derivative contracts-foreign currency (1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 2 | 7 |
Total Liabilities at fair value | 4 | |
Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 40 | 26 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 12 | 15 |
Total Liabilities at fair value | 10 | 9 |
Level 1 | Forward Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value, assets, Level 2 to Level 1 transfers, amount | 2 | 6 |
Level 1 | Derivative contracts-foreign currency (1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 2 | 6 |
Total Liabilities at fair value | 0 | |
Level 1 | Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 1 |
Total Liabilities at fair value | 44 | 26 |
Level 2 | Derivative contracts-foreign currency (1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 1 |
Total Liabilities at fair value | 4 | |
Level 2 | Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 40 | 26 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
Total Liabilities at fair value | 0 | 0 |
Level 3 | Derivative contracts-foreign currency (1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
Total Liabilities at fair value | 0 | |
Level 3 | Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 0 | 0 |
Investments related to the deferred compensation plan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 10 | 9 |
Investments related to the deferred compensation plan | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 10 | 9 |
Investments related to the deferred compensation plan | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
Investments related to the deferred compensation plan | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
Liabilities related to the deferred compensation plan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 10 | 9 |
Liabilities related to the deferred compensation plan | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 10 | 9 |
Liabilities related to the deferred compensation plan | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 0 | 0 |
Liabilities related to the deferred compensation plan | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | $ 0 | $ 0 |
Inventories - Components of Inv
Inventories - Components of Inventories, Net (Detail) - USD ($) $ in Millions | Jul. 02, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw material | $ 169 | $ 178 |
Work in process | 1 | 0 |
Finished goods | 264 | 272 |
Inventories, gross | 434 | 450 |
Inventory reserves | (72) | (56) |
Inventories, net | $ 362 | $ 394 |
Other Long-Term Assets - Compon
Other Long-Term Assets - Components of Other Long-Term Assets (Detail) - USD ($) $ in Millions | Jul. 02, 2016 | Dec. 31, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Long-term investments | $ 32 | $ 31 |
Long-term notes receivable | 14 | 14 |
Other long-term assets | 12 | 25 |
Investments related to the deferred compensation plan | 10 | 9 |
Long-term trade receivable | 7 | 11 |
Deposits | 3 | 2 |
Total | $ 78 | $ 92 |
Other Long-Term Assets - Additi
Other Long-Term Assets - Additional Information (Detail) - Enterprise Business | 6 Months Ended |
Jul. 02, 2016 | |
Minimum | |
Restructuring Cost and Reserve [Line Items] | |
Percentage of interest acquired | 0.40% |
Maximum | |
Restructuring Cost and Reserve [Line Items] | |
Percentage of interest acquired | 17.40% |
Accrued Liabilities - Component
Accrued Liabilities - Components of Accrued Liabilities (Detail) - USD ($) $ in Millions | Jul. 02, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Accrued other expenses | $ 120 | $ 131 |
Accrued compensation and related benefits | 53 | 47 |
Customer reserves | 38 | 38 |
Accrued incentive compensation | 28 | 62 |
Interest payable | 22 | 36 |
Accrued warranty | 21 | 22 |
Interest rate swap liability | 10 | 3 |
Restructuring liability | 7 | 9 |
Accrued other taxes | 4 | 10 |
Total | $ 303 | $ 358 |
Costs Associated with Exit an42
Costs Associated with Exit and Restructuring Activities - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Dec. 31, 2016 | Jul. 02, 2016 | Jul. 04, 2015 | |
Restructuring Cost and Reserve [Line Items] | ||||
Exit and restructuring charges, incurred life to date | $ 56 | $ 56 | ||
Zebra Legacy | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Exit and restructuring charges, incurred life to date | 13 | 13 | ||
Exit and restructuring charges | 2 | 4 | ||
Enterprise Solutions | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Exit and restructuring charges, incurred life to date | 43 | $ 43 | ||
Exit and restructuring charges | $ 3 | $ 7 | ||
Minimum | Scenario, Forecast | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Exit and restructuring charges | $ 15 | |||
Maximum | Scenario, Forecast | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Exit and restructuring charges | $ 20 |
Costs Associated with Exit an43
Costs Associated with Exit and Restructuring Activities - Summary of Exit and Restructuring Costs Incurred (Detail) - USD ($) $ in Millions | 6 Months Ended | 14 Months Ended | 20 Months Ended | |
Dec. 31, 2016 | Jul. 02, 2016 | Dec. 31, 2015 | Jul. 02, 2016 | |
The Acquisition | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Severance, stay bonus, and other employee-related expenses | $ 9 | $ 36 | $ 45 | |
Obligations for future non-cancellable lease payments | 2 | 9 | 11 | |
Total | $ 11 | $ 45 | $ 56 | |
Scenario, Forecast | Maximum | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total | $ 20 |
Costs Associated with Exit an44
Costs Associated with Exit and Restructuring Activities - Rollforward of Exit and Restructuring Accruals (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Restructuring Reserve [Roll Forward] | ||||
Balance at the beginning of the period | $ 13 | $ 8 | $ 14 | $ 7 |
Charged to earnings | 5 | 18 | 11 | 29 |
Cash paid | (5) | (8) | (12) | (18) |
Balance at the end of the period | $ 13 | $ 18 | $ 13 | $ 18 |
Cost Associated with Exit and R
Cost Associated with Exit and Restructuring Activities - Liabilities Included in the Balance Sheet (Details) - USD ($) $ in Millions | Jul. 02, 2016 | Apr. 02, 2016 | Dec. 31, 2015 | Jul. 04, 2015 | Apr. 04, 2015 | Dec. 31, 2014 |
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Reserve | $ 13 | $ 13 | $ 14 | $ 18 | $ 8 | $ 7 |
Accrued Liabilities | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Reserve | 7 | 9 | ||||
Other Long-term Liabilities | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Reserve | $ 6 | $ 5 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jul. 02, 2016 | Jul. 02, 2016 | Dec. 31, 2015 | |
Change in unrealized gain (loss) on anticipated sales hedging: | |||
Debt instrument, carrying amount | $ 2,873,000,000 | $ 2,873,000,000 | $ 3,012,000,000 |
Net liability position of derivatives | 9,000,000 | 9,000,000 | $ 11,000,000 |
(Loss) gain on accumulated other comprehensive income | 0 | 1,000,000 | |
Losses on the forward interest rate swaps designated in a hedging relationship expected to be reclassified from accumulated other comprehensive loss into earnings during the next 12 months. | 21,000,000 | 21,000,000 | |
Revolving Credit Facility | |||
Change in unrealized gain (loss) on anticipated sales hedging: | |||
Revolving credit facility maximum borrowing capacity | 250,000,000 | 250,000,000 | |
Term Loan | |||
Change in unrealized gain (loss) on anticipated sales hedging: | |||
Debt instrument, carrying amount | $ 2,200,000,000 | $ 2,200,000,000 |
Derivative Instruments - Financ
Derivative Instruments - Financial Information Related to Hedging of Net Assets Included in Consolidated Statements of Operations (Detail) € in Millions, £ in Millions, MYR in Millions, CZK in Millions, CAD in Millions, BRL in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | |||||||||||||||
Jul. 02, 2016USD ($) | Jul. 04, 2015USD ($) | Jul. 02, 2016USD ($) | Jul. 04, 2015USD ($) | Jul. 02, 2016CAD | Jul. 02, 2016MYR | Jul. 02, 2016GBP (£) | Jul. 02, 2016CZK | Jul. 02, 2016EUR (€) | Jul. 02, 2016BRL | Dec. 31, 2015USD ($) | Dec. 31, 2015CAD | Dec. 31, 2015MYR | Dec. 31, 2015GBP (£) | Dec. 31, 2015CZK | Dec. 31, 2015EUR (€) | Dec. 31, 2015BRL | |
Derivative [Line Items] | |||||||||||||||||
Realized gain (loss) from foreign exchange derivatives | $ 2 | $ (1) | $ (3) | $ 3 | |||||||||||||
(Loss) gain on net foreign currency assets | (7) | 12 | (1) | (19) | |||||||||||||
Foreign exchange (loss) gain | (5) | $ 11 | (4) | $ (16) | |||||||||||||
Net fair value of outstanding contracts (in millions) | $ 0 | $ 0 | $ 1 | ||||||||||||||
British Pound/US dollar | Foreign Exchange Forward | |||||||||||||||||
Derivative [Line Items] | |||||||||||||||||
Notional balance of outstanding contracts (in millions): | £ | £ 3 | £ 5 | |||||||||||||||
Euro/US dollar | Foreign Exchange Forward | |||||||||||||||||
Derivative [Line Items] | |||||||||||||||||
Notional balance of outstanding contracts (in millions): | € | € 124 | € 133 | |||||||||||||||
British Pound/Euro | Foreign Exchange Forward | |||||||||||||||||
Derivative [Line Items] | |||||||||||||||||
Notional balance of outstanding contracts (in millions): | £ | £ 0 | £ 7 | |||||||||||||||
Canadian Dollar/US dollar | Foreign Exchange Forward | |||||||||||||||||
Derivative [Line Items] | |||||||||||||||||
Notional balance of outstanding contracts (in millions): | CAD | CAD 12 | CAD 5 | |||||||||||||||
Czech Koruna/US dollar | Foreign Exchange Forward | |||||||||||||||||
Derivative [Line Items] | |||||||||||||||||
Notional balance of outstanding contracts (in millions): | CZK | CZK 137 | CZK 140 | |||||||||||||||
Brazilian Real/US dollar | Foreign Exchange Forward | |||||||||||||||||
Derivative [Line Items] | |||||||||||||||||
Notional balance of outstanding contracts (in millions): | BRL | BRL 7 | BRL 28 | |||||||||||||||
Malaysian Ringgit/US dollar | Foreign Exchange Forward | |||||||||||||||||
Derivative [Line Items] | |||||||||||||||||
Notional balance of outstanding contracts (in millions): | MYR | MYR 114 | MYR 13 |
Derivative Instruments - Fina48
Derivative Instruments - Financial Information Related to Cash Flow Hedges (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Change in unrealized gain (loss) on anticipated sales hedging: | ||||
Unrealized (loss) gain on anticipated sales hedging transactions | $ 11 | $ (5) | $ (4) | $ (3) |
Cash Flow Hedging | ||||
Change in unrealized gain (loss) on anticipated sales hedging: | ||||
Gross | 14 | (6) | (5) | (4) |
Income tax expense (benefit) | 3 | (1) | (1) | (1) |
Unrealized (loss) gain on anticipated sales hedging transactions | $ 11 | $ (5) | $ (4) | $ (3) |
Derivative Instruments - Fina49
Derivative Instruments - Financial Information Related to Cash Flow Hedges of Future Revenues (Detail) - Cash Flow Hedging € in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jul. 02, 2016USD ($) | Jul. 04, 2015USD ($) | Jul. 02, 2016USD ($) | Jul. 04, 2015USD ($) | Jul. 02, 2016EUR (€) | Dec. 31, 2015EUR (€) | |
Derivative [Line Items] | ||||||
Hedge effectiveness | 100.00% | 100.00% | ||||
Net (loss) gain included in revenue | $ | $ (5) | $ 5 | $ (6) | $ 11 | ||
Foreign Exchange Forward | ||||||
Derivative [Line Items] | ||||||
Notional balance of outstanding contracts versus the dollar (in millions) | € | € 445 | € 193 |
Derivative Instruments - Forwar
Derivative Instruments - Forward Contract Amounts Recorded in Consolidated Balance Sheets (Detail) - USD ($) $ in Millions | Jul. 02, 2016 | Dec. 31, 2015 |
Assets: | ||
Total Assets | $ 2 | $ 7 |
Derivative Liability [Abstract] | ||
Accrued Liabilities | 4 | 0 |
Prepaid expenses and other current assets | ||
Assets: | ||
Total Assets | $ 2 | $ 7 |
Derivative Instruments - Schedu
Derivative Instruments - Schedule of Balance Sheet Position of Forward Interest Rate Swaps Designated in Hedge Relationship (Detail) - USD ($) $ in Millions | Jul. 02, 2016 | Dec. 31, 2015 |
Change in unrealized gain (loss) on anticipated sales hedging: | ||
Accrued liabilities | $ 303 | $ 358 |
Other long-term liabilities | 110 | 99 |
Forward Interest Rate Swap | ||
Change in unrealized gain (loss) on anticipated sales hedging: | ||
Accrued liabilities | 7 | 1 |
Other long-term liabilities | $ 24 | $ 14 |
Hedge effectiveness | 100.00% | 100.00% |
Derivative Instruments - Sche52
Derivative Instruments - Schedule of Gross and Net Amount Offset (Detail) - USD ($) $ in Millions | Jul. 02, 2016 | Dec. 31, 2015 |
Change in unrealized gain (loss) on anticipated sales hedging: | ||
Net Fair Value in the Consolidated Balance Sheets | $ 4 | $ 0 |
Balance Sheet Offsetting | ||
Change in unrealized gain (loss) on anticipated sales hedging: | ||
Gross Fair Value | 71 | |
Counterparty Offsetting | 31 | |
Net Fair Value in the Consolidated Balance Sheets | 40 | |
Balance Sheet Offsetting | Counterparty A | ||
Change in unrealized gain (loss) on anticipated sales hedging: | ||
Gross Fair Value | 20 | |
Counterparty Offsetting | 12 | |
Net Fair Value in the Consolidated Balance Sheets | 8 | |
Balance Sheet Offsetting | Counterparty B | ||
Change in unrealized gain (loss) on anticipated sales hedging: | ||
Gross Fair Value | 7 | |
Counterparty Offsetting | 3 | |
Net Fair Value in the Consolidated Balance Sheets | 4 | |
Balance Sheet Offsetting | Counterparty C | ||
Change in unrealized gain (loss) on anticipated sales hedging: | ||
Gross Fair Value | 7 | |
Counterparty Offsetting | 3 | |
Net Fair Value in the Consolidated Balance Sheets | 4 | |
Balance Sheet Offsetting | Counterparty D | ||
Change in unrealized gain (loss) on anticipated sales hedging: | ||
Gross Fair Value | 14 | |
Counterparty Offsetting | 6 | |
Net Fair Value in the Consolidated Balance Sheets | 8 | |
Balance Sheet Offsetting | Counterparty E | ||
Change in unrealized gain (loss) on anticipated sales hedging: | ||
Gross Fair Value | 7 | |
Counterparty Offsetting | 3 | |
Net Fair Value in the Consolidated Balance Sheets | 4 | |
Balance Sheet Offsetting | Counterparty F | ||
Change in unrealized gain (loss) on anticipated sales hedging: | ||
Gross Fair Value | 8 | |
Counterparty Offsetting | 4 | |
Net Fair Value in the Consolidated Balance Sheets | 4 | |
Balance Sheet Offsetting | Counterparty G | ||
Change in unrealized gain (loss) on anticipated sales hedging: | ||
Gross Fair Value | 8 | |
Counterparty Offsetting | 0 | |
Net Fair Value in the Consolidated Balance Sheets | $ 8 |
Derivative Instruments - Sche53
Derivative Instruments - Schedule of Series of Forward Starting Swaps Each with a Term of One Year (Detail) $ in Millions | Jul. 02, 2016USD ($) |
Change in unrealized gain (loss) on anticipated sales hedging: | |
Notional balance of outstanding contracts | $ 2,329 |
Year 2,017 | |
Change in unrealized gain (loss) on anticipated sales hedging: | |
Notional balance of outstanding contracts | 697 |
Year 2,018 | |
Change in unrealized gain (loss) on anticipated sales hedging: | |
Notional balance of outstanding contracts | 544 |
Year 2,019 | |
Change in unrealized gain (loss) on anticipated sales hedging: | |
Notional balance of outstanding contracts | 544 |
Year 2,020 | |
Change in unrealized gain (loss) on anticipated sales hedging: | |
Notional balance of outstanding contracts | 272 |
Year 2,021 | |
Change in unrealized gain (loss) on anticipated sales hedging: | |
Notional balance of outstanding contracts | $ 272 |
Derivative Instruments - Sche54
Derivative Instruments - Schedule of (Loss) Gain Recognized on Forward Interest Rate Swaps Not Designated in Hedge Relationship (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Forward Interest Rate Swap | ||||
Change in unrealized gain (loss) on anticipated sales hedging: | ||||
Interest income (expense) on forward interest rate swaps | $ 1 | $ (2) | $ 2 | $ 0 |
Derivative Instruments - Sche55
Derivative Instruments - Schedule of Loss Recognized in Other Comprehensive Unrealized Loss on Forward Interest Rate Swaps Designated in Hedging Relationship (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Change in unrealized loss (gain) on forward interest rate swap hedging: | ||||
Net of taxes | $ (3) | $ 3 | $ (10) | $ (4) |
Forward Interest Rate Swap | ||||
Change in unrealized loss (gain) on forward interest rate swap hedging: | ||||
Gross | (5) | 5 | (15) | (7) |
Income tax (benefit) expense | (2) | 2 | (5) | (3) |
Net of taxes | $ (3) | $ 3 | $ (10) | $ (4) |
Warranty - Additional Informati
Warranty - Additional Information (Detail) | 6 Months Ended |
Jul. 02, 2016 | |
Wireless LAN Products | Enterprise Solutions | |
Product Warranty Liability [Line Items] | |
Product warranty period | 1 year |
Mobile Products | Enterprise Solutions | |
Product Warranty Liability [Line Items] | |
Product warranty period | 1 year |
Printers | |
Product Warranty Liability [Line Items] | |
Product warranty period | 1 year |
Thermal Printheads | |
Product Warranty Liability [Line Items] | |
Product warranty period | 6 months |
Batteries | |
Product Warranty Liability [Line Items] | |
Product warranty period | 1 year |
Battery Based Products | |
Product Warranty Liability [Line Items] | |
Product warranty period | 90 days |
Minimum | Advanced Data Capture Products | |
Product Warranty Liability [Line Items] | |
Product warranty period | 1 year |
Maximum | Advanced Data Capture Products | |
Product Warranty Liability [Line Items] | |
Product warranty period | 5 years |
Warranty - Summary of Accrued W
Warranty - Summary of Accrued Warranty Obligation (Detail) - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2016 | Jul. 04, 2015 | |
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Balance at the beginning of the period | $ 22 | $ 25 |
Warranty expense | 14 | 16 |
Warranty payments | (15) | (16) |
Balance at the end of the period | $ 21 | $ 25 |
Long-Term Debt - Summary of Car
Long-Term Debt - Summary of Carrying Value of Debt (Detail) - USD ($) | 6 Months Ended | ||
Jul. 02, 2016 | Dec. 31, 2015 | Oct. 15, 2014 | |
Debt Instrument [Line Items] | |||
Less: debt issuance costs | $ (24,000,000) | $ (26,000,000) | |
Less: unamortized discounts | (43,000,000) | (47,000,000) | |
Long-term debt | 2,873,000,000 | 3,012,000,000 | |
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Interest rate on senior notes, percent | 3.25% | ||
Debt instrument, carrying amount | 0 | 0 | |
7.25 % Senior Notes Due 2022 | |||
Debt Instrument [Line Items] | |||
Interest rate on senior notes, percent | 7.25% | ||
Debt instrument, carrying amount | $ 1,050,000,000 | 1,050,000,000 | |
Term Loan | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 4.00% | ||
Interest rate on senior notes, percent | 4.00% | ||
Debt instrument, carrying amount | $ 1,890,000,000 | $ 2,035,000,000 | |
Less: unamortized discounts | (4,900,000) | ||
Long-term debt | $ 2,200,000,000 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jul. 02, 2016 | Jul. 02, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | |||
Long-term debt | $ 2,873,000,000 | $ 2,873,000,000 | $ 3,012,000,000 |
Debt instrument, unamortized discount | 43,000,000 | 43,000,000 | $ 47,000,000 |
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Revolving credit facility maximum borrowing capacity | $ 250,000,000 | $ 250,000,000 | |
Interest rate at period end | 3.25% | 3.25% | |
Letters of credit | $ 4,000,000 | $ 4,000,000 | |
Funds available for other borrowings | 246,000,000 | 246,000,000 | |
Term Loan | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 2,200,000,000 | $ 2,200,000,000 | |
Percentage bearing variable interest, percentage rate | 4.00% | 4.00% | |
Periodic payment terms, balloon payment to be paid | $ 1,890,000,000 | $ 1,890,000,000 | |
Line of credit facility, principal prepayment | $ 145,000,000 | ||
Extinguishment of debt, percent of debt not substantially affected | 96.60% | 96.60% | |
Extinguishment of debt, percent of debt substantially affected | 3.40% | 3.40% | |
Gains (losses) on extinguishment of debt | $ 2,700,000 | ||
Debt instrument, unamortized discount | $ 4,900,000 | $ 4,900,000 |
Contingencies (Details)
Contingencies (Details) | Jul. 02, 2016officer |
Commitments and Contingencies Disclosure [Abstract] | |
Number of former officers being sued | 2 |
Loss per Share - Computation of
Loss per Share - Computation of Earnings Per Share (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Weighted average shares: | ||||
Basic weighted average shares outstanding (in shares) | 51,533,236 | 50,917,161 | 51,405,373 | 50,798,238 |
Effect of dilutive securities outstanding (in shares) | 0 | 0 | 0 | 0 |
Diluted weighted average and equivalent shares outstanding (in shares) | 51,533,236 | 50,917,161 | 51,405,373 | 50,798,238 |
Net loss | $ (49) | $ (77) | $ (78) | $ (102) |
Basic per share amounts: | ||||
Basic weighted average shares outstanding (in shares) | 51,533,236 | 50,917,161 | 51,405,373 | 50,798,238 |
Per share amount (in USD per share) | $ (0.95) | $ (1.50) | $ (1.51) | $ (2) |
Diluted per share amounts: | ||||
Diluted weighted average and equivalent shares outstanding (in shares) | 51,533,236 | 50,917,161 | 51,405,373 | 50,798,238 |
Per share amount (in USD per share) | $ (0.95) | $ (1.50) | $ (1.51) | $ (2) |
Loss per Share - Potentially Di
Loss per Share - Potentially Dilutive Securities Excluded from Earnings Per Share Calculation (Detail) - shares | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Earnings Per Share [Abstract] | ||||
Potentially dilutive shares (in shares) | 1,313,435 | 1,152,707 | 1,356,668 | 1,018,482 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Detail) - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2016 | Jul. 04, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Pre-tax share-based compensation expense recognized | $ 12 | $ 18 |
Tax related benefits recognized | 4 | $ 6 |
Total unearned compensation costs related to performance share awards | $ 61 | |
Total unearned compensation costs amortization period | 3 years 3 months 12 days | |
Performance Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares, Granted | 0 | |
Restricted Stock Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares, Granted | 377,017 | |
Stock Purchase Plan | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected weighted-average life | 3 months | |
Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares, Granted | 0 |
Share-Based Compensation - Weig
Share-Based Compensation - Weighted-Average Assumptions Used for Grants of Stock Options and SARs (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | |
Jul. 02, 2016 | Jul. 02, 2016 | Jul. 04, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk free interest rate, minimum | 0.25% | 0.02% | |
Risk free interest rate, maximum | 1.75% | 2.14% | |
Stock Option and Stock Appreciation Rights (SARs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected dividend yield | 0.00% | 0.00% | |
Forfeiture rate | 9.01% | 10.24% | |
Volatility | 43.14% | 33.98% | |
Risk free interest rate | 1.29% | 1.53% | |
Expected weighted-average life | 5 years 3 months 30 days | 5 years 3 months 25 days | |
Fair value of SARs granted (in millions) | $ 12 | $ 11 | |
Weighted-average grant date fair value of SARs granted (per underlying share) | $ 19.95 | $ 35.25 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of SARs Activity (Detail) - Stock Appreciation Rights (SARs) $ / shares in Units, $ in Millions | 6 Months Ended |
Jul. 02, 2016USD ($)$ / sharesshares | |
SARs | |
Shares, Outstanding at beginning of period | shares | 1,397,611 |
Shares, Granted | shares | 607,846 |
Shares, Exercised | shares | (39,830) |
Shares, Forfeited | shares | (40,539) |
Shares, Expired | shares | (1,417) |
Shares, Outstanding at end of period | shares | 1,923,671 |
Shares, Exercisable at end of period | shares | 946,826 |
Intrinsic value of exercised options (in millions) | $ | $ 1 |
Weighted- Average Exercise Price | |
Weighted-Average Exercise Price, Outstanding at beginning of year | $ / shares | $ 56.78 |
Weighted-Average Exercise Price, Granted | $ / shares | 51.55 |
Weighted-Average Exercise Price, Exercised | $ / shares | 40.06 |
Weighted-Average Exercise Price, Forfeited | $ / shares | 64.66 |
Weighted-Average Exercise Price, Expired | $ / shares | 74.72 |
Weighted-Average Exercise Price, Outstanding at end of period | $ / shares | 55.14 |
Weighted-Average Exercise Price, Exercisable at end of period | $ / shares | $ 43.73 |
Aggregate intrinsic value, Outstanding | $ | $ 26 |
Aggregate intrinsic value, Exercisable | $ | $ 20 |
Weighted-average remaining contractual term, Outstanding | 7 years 5 months |
Weighted-average remaining contractual term, Exercisable | 5 years 5 months |
Share-Based Compensation - Su66
Share-Based Compensation - Summary of Restricted Stock Award Activity (Detail) - Restricted Stock Awards | 6 Months Ended |
Jul. 02, 2016$ / sharesshares | |
Restricted Stock Awards | |
Shares, Outstanding at beginning of period | shares | 566,447 |
Shares, Granted | shares | 377,017 |
Shares, Released | shares | (223,318) |
Shares, Forfeited | shares | (18,520) |
Shares, Outstanding at end of period | shares | 701,626 |
Weighted-Average Grant Date Fair Value | |
Weighted-Average Grant Date Fair Value, Outstanding at beginning of year | $ / shares | $ 77.68 |
Weighted-Average Grant Date Fair Value, Granted | $ / shares | 51.38 |
Weighted-Average Grant Date Fair Value, Released | $ / shares | 55.74 |
Weighted-Average Grant Date Fair Value, Forfeited | $ / shares | 73.58 |
Weighted-Average Grant Date Fair Value, Outstanding at end of period | $ / shares | $ 70.47 |
Share-Based Compensation - Su67
Share-Based Compensation - Summary of Performance Share Award Activity (Detail) - Performance Share Awards | 6 Months Ended |
Jul. 02, 2016$ / sharesshares | |
Performance Stock Awards | |
Shares, Outstanding at beginning of period | shares | 332,630 |
Shares, Granted | shares | 179,385 |
Shares, Released | shares | (108,371) |
Shares, Forfeited | shares | (6,363) |
Shares, Outstanding at end of period | shares | 397,281 |
Weighted-Average Grant Date Fair Value | |
Weighted-Average Grant Date Fair Value, Outstanding at beginning of year | $ / shares | $ 73.40 |
Weighted-Average Grant Date Fair Value, Granted | $ / shares | 50.36 |
Weighted-Average Grant Date Fair Value, Released | $ / shares | 46.07 |
Weighted-Average Grant Date Fair Value, Forfeited | $ / shares | 71.33 |
Weighted-Average Grant Date Fair Value, Outstanding at end of period | $ / shares | $ 70.18 |
Share-Based Compensation Share-
Share-Based Compensation Share-Based Compensation - Summary of Restricted Stock Units Activity (Details) - Restricted Stock Units | 6 Months Ended |
Jul. 02, 2016shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares, Outstanding at beginning of period | 38,746 |
Shares, Granted | 31,194 |
Shares, Released | (7,585) |
Shares, Forfeited | (1,485) |
Shares, Outstanding at end of period | 60,870 |
Share-Based Compensation - We69
Share-Based Compensation - Weighted-Average Assumptions Used for Employee Purchase Rights Granted Under Stock Purchase Plan (Detail) - Stock Purchase Plan - $ / shares | 6 Months Ended | |
Jul. 02, 2016 | Jul. 04, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Fair market value | $ 60.28 | $ 82.68 |
Option price | $ 57.26 | $ 78.55 |
Expected dividend yield | 0.00% | 0.00% |
Expected volatility | 58.00% | 27.00% |
Risk free interest rate | 0.21% | 0.04% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) | 6 Months Ended | |
Jul. 02, 2016 | Jul. 04, 2015 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 6.20% | 8.40% |
Statutory tax rate | 35.00% |
Accumulated Other Comprehensi71
Accumulated Other Comprehensive Loss - Components of Accumulated Other Comprehensive (Loss) Income (AOCI) (Detail) - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2016 | Jul. 04, 2015 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | $ (49) | $ (9) |
Other comprehensive income (loss) before reclassifications | (28) | (3) |
Amounts reclassified from AOCI to income | 7 | (18) |
Tax benefit | 6 | 4 |
Other comprehensive loss | (15) | (17) |
Ending Balance | (64) | (26) |
Unrealized (losses) gain on sales hedging | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | (1) | 5 |
Other comprehensive income (loss) before reclassifications | (11) | 7 |
Amounts reclassified from AOCI to income | 6 | (11) |
Tax benefit | 1 | 1 |
Other comprehensive loss | (4) | (3) |
Ending Balance | (5) | 2 |
Unrealized (losses)/ gains on forward interest rate swaps | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | (15) | (8) |
Other comprehensive income (loss) before reclassifications | (16) | (7) |
Amounts reclassified from AOCI to income | 1 | 0 |
Tax benefit | 5 | 3 |
Other comprehensive loss | (10) | (4) |
Ending Balance | (25) | (12) |
Currency translation adjustments | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | (33) | (6) |
Other comprehensive income (loss) before reclassifications | (1) | (3) |
Amounts reclassified from AOCI to income | 0 | (7) |
Tax benefit | 0 | 0 |
Other comprehensive loss | (1) | (10) |
Ending Balance | $ (34) | $ (16) |
Accumulated Other Comprehensi72
Accumulated Other Comprehensive Loss - Reclassification Out of AOCI to Earnings (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Unrealized losses (gains) on sales hedging: | ||||
Unrealized (loss) gain on anticipated sales hedging transactions | $ 11 | $ (5) | $ (4) | $ (3) |
Unrealized losses (gains) on forward interest rate swaps: | ||||
Net of taxes | (3) | 3 | (10) | (4) |
Foreign currency translation adjustment | (6) | (8) | (1) | (10) |
Reclassification Out of AOCI to Earnings | ||||
Unrealized losses (gains) on forward interest rate swaps: | ||||
Foreign currency translation adjustment | 0 | (7) | 0 | (7) |
Total amounts reclassified from AOCI | (4) | 11 | (6) | 16 |
Reclassification Out of AOCI to Earnings | Unrealized (losses) gain on sales hedging | Net sales of tangible products | ||||
Unrealized losses (gains) on sales hedging: | ||||
Total before tax | 5 | (5) | 6 | (11) |
Tax (benefit) expense | (1) | 1 | (1) | 2 |
Unrealized (loss) gain on anticipated sales hedging transactions | 4 | (4) | 5 | (9) |
Reclassification Out of AOCI to Earnings | Unrealized losses (gains) on forward interest rate swaps: | Interest expense and other, net | ||||
Unrealized losses (gains) on forward interest rate swaps: | ||||
Total before tax | 0 | 0 | 1 | 0 |
Tax expense (benefit) | 0 | 0 | 0 | 0 |
Net of taxes | $ 0 | $ 0 | $ 1 | $ 0 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 6 Months Ended |
Jul. 02, 2016Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Segment Information - Segment I
Segment Information - Segment Information by Reportable Segments (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Net sales: | ||||
Net sales | $ 879 | $ 890 | $ 1,726 | $ 1,783 |
Operating income: | ||||
Operating income | 22 | (14) | 22 | 6 |
Operating Segments | ||||
Net sales: | ||||
Net sales | 882 | 894 | 1,732 | 1,793 |
Operating income: | ||||
Operating income | 125 | 105 | 230 | 236 |
Corporate, Eliminations | ||||
Net sales: | ||||
Net sales | (3) | (4) | (6) | (10) |
Operating income: | ||||
Operating income | (103) | (119) | (208) | (230) |
Zebra Legacy | Operating Segments | ||||
Net sales: | ||||
Net sales | 305 | 320 | 618 | 652 |
Operating income: | ||||
Operating income | 57 | 62 | 126 | 139 |
Enterprise Solutions | Operating Segments | ||||
Net sales: | ||||
Net sales | 577 | 574 | 1,114 | 1,141 |
Operating income: | ||||
Operating income | $ 68 | $ 43 | $ 104 | $ 97 |